On the First Day of Class,Jane's History Professor Passes Around

question 24

Multiple Choice

On the first day of class,Jane's history professor passes around a blank sheet of paper claiming that she had not yet received the official class roster.All 21 students in the room sign it.That night,she types on the bottom of the roster sheet,"We,the above-signed parties,hereby promise to pay to the order of professor,$50,000 on demand." A month later,when the class pools their money and buys a winning lottery ticket worth $100,000,the professor presents the instrument and demands her money.Which of the following statements is true?

• A)The professor is guilty of a misrepresentation because she knowingly said it was a roster sheet,not a potential negotiable instrument.
• B)The professor is guilty of undue influence because she induced the students to sign the sheet by virtue of her superior position as the professor.
• C)The professor is guilty of a fraud in the execution because she took advantage of her students' trust in her and intentionally said it was a roster sheet.
• D)The professor is guilty of causing economic duress because she could have had any student who failed to sign the sheet removed from the class with tuition and other monetary implications arising; so students were forced to sign.

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Definitions:

Retained Earnings

The stockholders’ equity created from business operations through revenue and expense transactions; an account representing the net income retained in a corporation.

Noncash Accounts

Accounts in financial accounting that represent transactions not involving physical cash, such as depreciation or credits.

Noncurrent Assets

Assets that are not expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of the business, typically including property, plant, and equipment.

Treasury Stock

Stocks that the issuing company initially released and then bought back, decreasing the total shares available for trading.